Secondary markets across Kentucky have faced a persistent valuation problem that has blocked development for 20 years, according to James Church, a commercial real estate agent and CCIM candidate at Keller Williams Commercial in Clarksville, Tennessee. While neighboring Tennessee markets draw billions in corporate investment and add jobs rapidly, Kentucky’s Hopkinsville and Oak Grove remain underdeveloped — even as Hopkinsville alone faces a documented shortage of 3,000 housing units. The main obstacle is not a lack of capital or investor interest. Appraisals consistently come in below the price needed for development to make financial sense, preventing deals from moving forward.
“Appraisals seem to be the common issue in Kentucky for the last 20 years,” Church says. When land fails to appraise at the necessary value, projects are halted before construction begins, creating a lasting barrier to market growth.
The contrast between Tennessee and Kentucky in the Clarksville-Hopkinsville corridor shows how appraisal constraints can set neighboring regions on very different development paths. Tennessee’s Clarksville market recently secured a $6.6 billion investment from Korean company Nystar, which Church says will create about 14,150 jobs. This influx has triggered additional development, including a 200-acre project and multiple land assemblages that Church is marketing to national developers.
Just across the border, Kentucky markets face a different reality. Church has identified 110 acres near a planned Buc-ee’s at Exit 89 and is working on another 110-acre development site in Oak Grove. Yet these projects remain stalled by appraisal challenges that Tennessee developments do not face.
“The demand is definitely focused on Tennessee,” Church says. “It’s been a very big stigma to go across that border, to go into Kentucky.”
Church attributes part of this stigma to historical issues with local government and prior development cycles, but the appraisal problem persists regardless of leadership changes. When land values do not support the price developers need to pay, deals fall apart and the market remains stuck in low-growth mode.
The mechanics of the appraisal problem are straightforward but hard to resolve. Developers need to buy land at prices that allow for profitable projects. Landowners expect to sell at prices reflecting the land’s development potential. Lenders require appraisals that justify the loan amount. When appraisals fall short of the contract price, three outcomes are possible: the buyer walks away, the seller lowers the price, or the buyer brings extra cash to close the gap.
In Kentucky’s secondary markets, Church says the most common result is that developers abandon the deal and look elsewhere — often in Tennessee or other markets where appraisals support the economics. This creates a feedback loop: fewer completed developments mean fewer comparable sales, which limits the data appraisers can use to justify higher valuations, keeping future appraisals low.
“If we have land that we want developed, and the land is not coming in at appraisal, that can stop an entire development,” Church says.
The problem is most acute for land deals, where appraisers must estimate future value based on development potential rather than current income. In markets with limited recent sales, appraisers default to conservative valuations, which undermines the activity needed to generate higher comparable sales.
Church points to differences in local government approaches as a factor in the two-state divide. In Clarksville, the Industrial Development Board has expanded its powers to include residential development, allowing it to self-fund and build homes, condominiums, townhomes, and multifamily properties. This speeds up approvals and signals to developers that the city actively supports growth.
Kentucky markets have been slower to adopt similar strategies. Church notes that new local leadership is more open to public-private partnerships, but the appraisal problem remains unresolved. Without a way to bridge valuation gaps, even supportive local governments struggle to attract large-scale developers who could establish new market comparables.
Church currently has 73 acres off-market in Robertson County, Tennessee, where he is seeking national developers. The plan is to bring in a large developer to subdivide and sell to smaller builders, creating a steady pipeline of projects. This approach works in Tennessee, where appraisals support the initial land purchase. In Kentucky, the same strategy stalls at the appraisal stage.
Kentucky’s appraisal problem has broader consequences for how secondary markets grow. Markets unable to close valuation gaps risk being bypassed as capital flows to areas with fewer barriers. This widens the gap between high-growth and low-growth regions, even when underlying demand is strong.
Church’s experience shows that Kentucky markets have clear demand signals. Hopkinsville’s 3,000-unit housing deficit is one example. But without a mechanism to bridge the appraisal gap, that demand goes unmet, and developers continue to prioritize Tennessee.
One possible solution is for local governments to take a more active role in land assembly and predevelopment, reducing risk for private developers and creating the initial comparables needed for higher appraisals. Another is for lenders to adopt more flexible underwriting in markets with strong demand but limited transaction history. The persistence of this problem over two decades suggests neither approach has gained traction. Until this barrier is addressed, Kentucky is likely to continue missing out on the economic momentum seen just across its southern border.
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